Industry Updates

The Dynamics of Sport Sponsorship and its Role in the Marketing Mix

21 Mar 2011

Sport is an inextricable part of the South African culture and fabric.
The defeats and triumphs of our national teams and athletes affect our
national mood and self-perception.

Cases in point are the somber national mood as a result of the less than
expected performances of our Springboks at RWC 99, Bafana Bafana at
soccer World Cup in 1998, the Proteas at the Cricket World Cup in 1999,
the outcry and shame at Hansie Cronje's cricket scandal, and the
national disappointment at the loss of the soccer World Cup 2006 bid.

On the other hand, euphoria, national pride and wild celebrations
welcomed the Springboks victory at RWC 95, Bafana Bafana at the CAF
competition in 1996, and Penny Heyns and Josia Thugwane's gold medal
performances at Olympics 1996. On those days, spectacularly positive or
negative results are the headlines on all major news carriers. Sport
is used as a draw to the rest of the news bulletin.

The birth of sport sponsorship
Sport touches our emotional core like no other activity. In many ways
athletes shoulder the hopes, aspirations, dreams and self-esteem of
supporters. Their performances and actions on the field have a profound
impact on fans; on the relationships they, as consumers of the sport,
have with the sport, the players and those who are associated with the
sport - the sponsors and organizers.

During any 90 minutes of a Chiefs versus Pirates match, 80 minutes of a
Springboks versus New Zealand game, or 9.82 seconds of a Maurice Green
100m sprint, live at the event or in front of a television, the
consumers are transfixed in a 'zone;' a state of mind where nothing
matters in the world but the action on the field. For that moment, they
consume every bit of information related to the action on the field:
the game and its sponsors. During this time, they are connected to
their heroes.

These are the moments that most marketers buy into with their
sponsorship; to be a part of the 'zone' of reference, to form or
formalize a relationship with the consumers, who span the rich and
diverse South African race and cultural landscape.

With the proliferation of global and local competition, of off-line and
on-line media, and the complexities of targeting South Africa's diverse
consumers, success in winning their attention is often the difference
between the success and failure for most brands.

Marketers who want to focus their communication and capitalize on a
captive and attentive market at a point in time - sports fans - have
incorporated sport sponsorship into their integrated marketing mix.

Sponsorship, like advertising, is the most visible component of the
marketing mix, and plays a critical and active role in affecting or
shaping the target consumer or affected consumers' opinion on the
sponsor's brand.

Since 1994, when South African sport took its rightful place in the
international sporting stage after many years of isolation, and global
sport brands re-entered our shores, sport sponsorship has grown at
exponential rates. Major local telecommunications companies such as
Vodacom and MTN, and beer giant, SAB, have led the way, investing
millions into the most popular team sports: soccer and rugby, and
athletes. According to BMI Sport Info, sport sponsorship has been
growing at an estimated 22% annually and accounting for an excess of 20%
of most sponsor companies' communication budgets, taking a prominent
role in the marketing mix and share of the demand creation budget. On
the other hand, advertising investment grew by significantly less than
10 percent.

Sport in the marketing mix
Marketing, as generally defined, is the management of mutually
beneficial relationships. Consequently, sponsorship of sport or other
events, is now an essential element in the marketing mix, and a proven
communication vehicle or medium to facilitate the relationship between
the sponsor and the sport consumer, who is either an active participant
or spectator of sport.

Marketers' primary reason for choosing sport as the platform for
building a relationship is to gain the elusive attention of the
consumer, and etch their brand's position in the consumer's world.
Positioning, as described by Ries & Trout in their 1986 classic,
Positioning, is the perception in the mind of the consumer of the
sponsor and/or their brands. Marketers want to establish with their
target consumers, a new position, to reinforce a position or to change
their position relative to their competitors.

Because of the very personal nature of the relationship between sports
and its consumers, the benefits of strategic sport sponsorship far
outweigh the impact on the brand than other elements of the marketing
mix. Although in general sponsorship occurs at a point in time and
specific place, the leverage from media exposure and word-of-mouth often
contributes to a return in investment of as much as 15 times in media
value (in multi-media brand awareness created).

Properly executed, a strategic sponsorship can go a long way toward
solidifying a long-term relationships between the sponsor and the
target consumer; reinforcing the brand's position, top-of-mind awareness
and overall, creating a sustainable competitive advantage.

The Seven Pitfalls of Sport Sponsorship
Buoyed by the growth in sport sponsorship and the related success of
many organizations, sport has spawned many new companies: sport
marketing, sports research & information, sport marketing
administration and education and sport merchandising.

Unfortunately, in South Africa, because of the relative infancy of the
industry compared to the United States of America and Europe, many
corporations have jumped blindly into the sport sponsorship business
with good intentions but no well-thought out strategies, if any at all.

There are seven principal reasons sponsors' money has often gone down the drain in sport sponsorship.

1. Clear Strategic Objectives
First, as Harvard marketing professor Ted Levitt observed far back in
his 1960 classic, 'Marketing Myopia,' most companies do not have an
understanding of the businesses they are in or the consumers they serve.
Consequently, they go into sport or any sponsorship, without an
understanding of the position or message they want to communicate with
their sponsorship. They enter into a sponsorship relationship without
having clearly thought-out their long-term strategic objectives for the
sponsorship.

More often than not, most have as an objective, 'to create awareness of
the brand.' Typically, in pursuance of this objective they will be more
concerned with the breadth of exposure and the size and prominence of
their logos, rather than with how the association of their brand with
the sport will translate to their consumers.

Many don't realize, as the late advertising giant Bill Bernbach of DDB
Worldwide once said, 'Getting a product known isn't the answer. Getting
the product wanted is the answer. Some of the best known product names
have failed.' The demand for a product is not cradled on the awareness
of the brand only. Awareness, as created by sponsorship, is only one
element of the marketing mix. Matching what the company stands for with
the right consumers in the right environment is the first key.

Pepsi Cola, an established brand, with a defined target market the
new generation invested millions in a long-term contract with
Johannesburg Athletics Stadium, gained immeasurable exposure in the
South African market, yet failed spectacularly because although the
product and target market were right, two key elements of the marketing
mix were wrong: distribution and demand creation, i.e., being at the
right places and creating demand for their product by sponsoring
appropriate events that interest their target market the 'new
generations.' Red Bull, an energy drink, is an excellent example of a
brand that sponsors events which are appropriate to their consumers -
raves and extreme sport athletes.

2. Sport's Relevance to Consumer
Second, most companies pour large amounts of sponsorship money into a
sport without consideration of the brand consumers' sport preferences.
Other than the obvious emotional element, sport is like any product in
its diversity of consumers; and in South Africa, in the diversity of its
followers.

Soccer, which has the highest participation at 1.8m adults versus rugby
at 350 000 (BMI Sport Info) is primarily black oriented, while rugby is
white oriented. Soccer is also the undisputed #1 spectator sport of the
majority of the 44m South Africans. For many years, sport such as
rugby and cricket have benefited from enormous sponsorship and selection
as a vehicle to build brands, where it would have made sense to spend
the money in soccer because the majority of the brands' consumers
followed soccer.

However, many sponsorship decisions are sometimes made based on the
preferences or familiarity of company executives and brand managers
with the sport, rather than the fit between consumers and the sport, and
communication objectives.

There should be a fit between the sponsor and the sport, in terms of brand position and/or target market profile.

3. Credible Product or Service
Third, sponsors pour money into a sport with the hope of 'buying' an
advantage for their product. Sponsorship, like advertising, cannot
create an advantage for your product. It can only convey it. As
Bernbach put it, 'the magic is in the product.' If the consumer does
not perceive any real rational or emotional benefits in the brand, then
no amount of sponsorship money can save the product or the sponsor.
Instead, it could shorten the life span of the product and possibly, the
sponsor. Great sponsorship, like advertising, is the fastest way to
kill a bad product.

4. Sponsorship Leverage
Fourth, most sponsors think their principal sponsorship is the end of
the job. The generally accepted standard is that for every rand you
spend you need to spend at least twice as much to leverage your
sponsorship; to communicate to your target consumers the connection
between the target market, the sport and the sponsor - the reason why.
Because many sponsors do not fulfil this critical part of the
sponsorship mix, many competitors have taken advantage of this loophole
to leverage their connection with the sport.

The Association of Marketers' (ASOM) defines this activity as 'ambush
marketing: 'an attempt by an organization to create the impression of
being an official sponsor of the event or activity by affiliating itself
with that event without having paid the sponsorship rights fee or being
a party to the sponsorship contract'. Marketing, and sponsorship
marketing for that matter, is a competitive battlefield to capture the
prized attention of consumers.

And in sport sponsorship the battlefield is the sport arena where the
sponsors and 'ambushers' fight for the consumer's share of mind space.

Nike is often accused of being an ambush marketer. A classic example
always quoted is the Reebok sponsored Comrades in 1996 when Nike
contributed R25 toward the Paralympics' Atlanta Games for every runner
finishing with a swoosh decalled on their face. The publicity Nike
received for their investment of R25 000 was 100 times, to the dismay of
Reebok, which led to the organisers banning runners wearing the decal.

In 1998 adidas was the principal sponsor of the soccer World Cup in
France when France, an adidas sponsored team, played Brazil, a Nike
sponsored team, in the finals. In the soccer World Cup in 1994 in the
USA, there were no Nike sponsored soccer teams, while in 1998, there
were six out of a total of 32. In the post-event research conducted, 32
percent of consumers thought the soccer World Cup was sponsored by
Nike, compared to 34 percent for adidas, the official sponsor.

Nike earned the recognition at the event through leveraging our
association with the athletes, teams and the sport by creating an
ambitious soccer village, staging the global finals of Nike Premier Cup,
a world u/14 youth tournament, and sponsoring elite athletes and teams - Ronaldo, Edgar Davids, Benni McCarthy, Brazil, Holland, and Nigeria,
inter alia - that reflect the personality and performance of Nike. With
creative sponsorship leverage and a credible product point of view Nike
established themselves overnight as a soocer brand.

Advertising, publicity, word-of-mouth, and the brand exposure from
intergrated leveraging of your sponsorship goes a long way toward
establishing a long-term relationship with consumers and creating a
halo-effect for the brand. These do not happen naturally. They are
deliberate and planned actions of the sponsor. In a playing field
dominated by hundreds of sponsors, creatively leveraging your investment
is the winning game plan.

5. Long-term Commitment
Fifth, sponsors often take a short-term approach to sponsorship either
deliberately or due to change in strategy. Marketing is a long-term
relationship. It is not a once-off event. A relationship is something
that takes place over time, for mutual benefit, anchored on long-term
commitment and trust. In general, no sponsor can expect to win the
affection of consumers in the short term. There has to be a commitment
to building the relationship over time - usually three to five years.

In 1999, cellular giant MTN became the title sponsor of the Two Oceans
Marathon (56km), which after the Comrades, is the most popular in scenic
Cape Town. Also co-sponsored by Nike, the event, largely due to
excellent leveraging and professional execution by MTN and Nike, was
voted the best-ever ultra-marathon in Africa and won the Association of
Marketers' best sponsored event at the inaugural Raptors Awards.
Runners and the running media praised it as the best executed event.

Unfortunately, due to a change in strategy, MTN did not re-new their
one-year commitment. Why did they sponsor the event in the first place?
Other than the burst of short-term awareness, what long-term benefits
have they gained? What long-term relationship did they build with the
running community? On the other hand, IWISA Maize Meal, through the
long-term sponsorship of Kaizer Chiefs and the IWISA Spectacular Charity
event gained enormous market share and long-term top-of-mind awareness
from their association with South Africa's premier team and event. The
same can be said of Fedsure's sponsorship of the Stormers, Rothman's
sponsorship of the July Handicap, and Bankfin's sponsorship of the
Currie Cup.

6. Focused Strategy
Sixth, most organizations lack focus, and throw their money in a variety
of sports, like casting a net in the sea with the hope of catching any
fish.

To dominate your market and succeed, the best marketers choose their
customers and narrow their focus. That is one principal reason Nike is
the dominant and leading brand of choice in literally every market it
operates. As illustrated in Arthur Anderson's Best Practices book,
Nike's secret of success is the combination of three essential
ingredients: innovative products, focussed segments, and a clear
understanding of the emotional ties that bind consumers to their sport.
Nike is focused on creating innovative performance products for a few
selected sports - soccer, rugby and running in South Africa 'in which
they can live up to the consumers' expectations i.t.o. product
performance.

7. Sponsorship rights and obligations
Finally, most sponsors do not understand the business of sport
sponsorship. They do not know what rights and obligations they are
buying, other than the association with the sponsored. As a result,
many come out of the experience disappointed with the results. As the
old adage goes: 'you get what you pay for.' Buyers beware.

Sport sponsorship can generally be put under three categories: title
sponsor where the name of the sponsored event or team is linked with
sponsors, e.g. Bankfin Currie Cup; supplier or official sponsor status
where the sponsor is recognized as 'official sponsor of X.' Another,
less popular in the South African market, is the presenting sponsor
category, where there's typically a title sponsor and a second major
sponsor, e.g. Old Mutual Two Oceans Marathon Presented by Nike.

There are three general types of sponsors: those who are integral to the
sport, e.g. Nike sponsoring the Springbok's kit; those who are
indirectly associated with the sport, e.g. Vodacom as the official
cellular supplier of Chiefs, and finally those whose image or target
market profile is linked to the followers of sports, e.g. Nedbank Golf
Challenge.

Each category of sponsorship or sponsor carries with it a set of rights
and obligations relating to usage of the name of a sponsored sport team,
event or athlete, merchandising, branding, leveraging, category
limitations and future rights; regardless of the amount of money paid.
Irrespective of the rights and obligations, and investment in the
project, the best sponsorships are those where the sponsor asserts the
rights acquired and takes full responsibility for leveraging their
sponsorship, rather than leaving the ball in the other court.

Of course with sport sponsorship, the performance of the sponsored team,
athlete or event more often than not affects the perception of the
sponsors' product or company. When Michael Johnson excels in Nike
spikes, generally, the assumed consumer take-away is that Nike is the
premier athletes' brand of choice. Which is generally the take-away or
association sponsors desire. Similarly when Hansie or any other athlete
or team is entangled in negative publicity sporting a familiar brand,
the consumer's take-away could be that that brand's athletes or teams
are less than exemplary and by association, the sponsor brand can be
perceived negatively.

Is sports sponsorship here to stay? The Hansie scandal will fade, and
South Africa will host the Cricket World Cup in 2003. The 'boks will
start winning consistently again and recapture the magic of 1995.
Bafana Bafana will represent South Africa at the world's most popular
team event, the soccer World Cup in 2002 and 2006, and the likes of
Hezikiel Sepeng, Josia Thugwane and Penny Heyns, or their successors,
will continue to light up the world's most spectacular world sport
stage, the Olympics at Sydney in 2000 and Greece in 2004. And the fans
will be right behind them.

That's where the astute marketers will be as well. Success will go to
those who understand not only the sport itself, but the emotional ties
that bind consumers to their sport, and leverage the sport and/or event
to build a long-term relationship with the consumer and a sustainable
competitive advantage.

Thebeetsile Ikalafeng, BSc(BA). MBA. CM(SA) is Nike's Regional
Marketing Director for Africa, chairman of Loeries 2000/2001 Committee,
the best-selling author of Conquer the Job Market, The Next Step and
co-author & co-publisher of Felicia Mabuza-Suttle's Dare To Dream,
and a Doctor of Commerce candidate at RAU.